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HomeMy WebLinkAbout2011 02 08 Consent 200 Requesting Approval of the November 9, 2010 Regular Meeting Mnutes CITY OF WINTER SPRINGS, FLORIDA MINUTES 4=0 BOARD OF TRUSTEES ? REGULAR MEETING CZ". NOVEMBER 9, 2010 CALL TO ORDER The Regular Meeting of Tuesday, November 9, 2010, of the Board of Trustees was called to Order by Chairperson Maria Fair at 5:30 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson Maria Fair, present Vice Chairman Ben McMahan, present Board Member Vernon Rozelle, Jr., present Board Member Max Swaim, present Board Member Barbara Watkins, present A moment of silence was followed by the Pledge of Allegiance led by Chairperson Fair. Next, Chairperson Fair asked if there were any Agenda changes and there were none noted. REGULAR AGENDA — PART I REGULAR 600. Finance And Administrative Services Department Requesting Acceptance Of The 2009 Actuarial Valuation Report By Gabriel, Roeder, Smith & Company (GRS). Mr. Larry Wilson, A.S.A., Senior Consultant and Actuary, Gabriel, Roeder & Smith Company (GRS), One East Broward Boulevard, Suite 505, Fort Lauderdale, Florida: (via telephone) thanked everyone for accommodating him so he could present telephonically and reviewed the Actuarial Report with the Board Members. Referring to the City of Winter Springs Defined Benefit Plan, Mr. Wilson stated, "This Valuation is as of October 1, 2009. That means it is based upon employee census and asset information as of October 1, 2009. Having said that, if you look at the Retirement Plan costs, it determines the contribution requirement for the City and the County to be paid for in the Fiscal Year 2010 -2011 so that it is actually projecting it forward a year. The advantage of the projection is that it gives the City time to budget for the change in the contribution from year to year." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 9, 2010 PAGE 2 OF 9 Mr. Wilson explained the Retirement Plan Costs and pointed out that, "The County has a contract with the City to contribute based on the rate that the Florida Retirement System cost is, so again - to ensure that the minimum contribution is met." /ammo Continuing, Mr. Wilson commented on the comparison of last year and this year's Valuation results and commented, "There have been no changes in Actuarial Assumptions, Methods or Planned Benefits." The City of Winter Springs Defined Benefit Plan Comparison of Cost Data of October 1, 2008 and October 1, 2009 Valuations on page six (6), Actuarial Gains (Losses) for Plan Year Ending September 30, 2009 on page eleven (11), and Recent Compensation, Termination and Investment Return Experience on page thirty-five (35) was reviewed. Mr. Wilson commented that, "The State requires that the Plan be actuarially solvent so on Page 3 we indicate that to the extent that the contributions are made as provided under this Valuation and future Valuations as the City makes those contributions. The Fund is actuarially solvent as defined by State Statutes." Continuing, Mr. Wilson mentioned that, "Our Certification that the Report complies with Florida Statutes under Chapter 112 of the Florida Statutes, so we are Certifying that we have liabilities for all the benefits that are being provided and that we met the requirements of Part VII, of Chapter 112 of the Florida Statutes." Chairperson Fair asked, "Based on the information you just gave us about the report for the period ending 9 -30 -10 (September 30, 2010), will that be available at our next regularly scheduled Meeting - (February 8, 2011) ?" Mr. Wilson replied, "I have no doubt that it will." Continuing, Mr. Wilson then added, "I see no problem meeting that deadline. We should have it well before that date." Next, Chairperson Fair explained, "Some of these Amendments that were made that you saw in the chart — page 38, really created Unfunded Past Service Liability for the Plan and so these changes were made, but I don't think funding was calculated." City Manager Kevin L. Smith spoke of the change of assumptions related to State Required Exhibit on page 39. Referring to the letter dated September 24, 2010 on page 3, Chairperson Fair asked, "You are basically telling us that the Plan is sufficiently funded and that it is a solvent Plan. Are there some risk factors that you could readily identify that might cause us to question some potential short or long term for insolvency of this Plan?" Mr. Wilson responded by saying, "Again, to the extent you make the Actuarial required contributions, we would not see any failure to have enough money to pay Benefits." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES /Mrs, REGULAR MEETING - NOVEMBER 9, 2010 F�� PAGE 3 OF 9 Mr. Dave West, Bogdahn Consulting, LLC, 4901 Vineland Road, Suite 600, Orlando, C=' Florida: spoke of the input from investments and funding status. 03i P ass Next, Mr. Wilson mentioned that, "Some of the benefits or reasons that it may be helpful is that one (1), the assets have built up over time so, five (5) years ago — where you say we had an eleven percent (11 %) retum, that was on a lower asset basis." Mr. Wilson M added, "An eleven percent (11 %) retum, there is a good chance we will hit an eight percent (8 %) return on an Actuarial basis." Continuing, Mr. Wilson then added, "It looks like the eight percent (8 %) is possible to be achieved, but we would have to work the numbers through." Chairperson Fair asked, "We are looking for Approval to accept this 2009 (Actuarial) Valuation." "I MAKE A MOTION TO ACCEPT THE VALUATION REPORT." MOTION BY BOARD MEMBER SWAIM. SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. VOTE: VICE CHAIRMAN McMAHAN: AYE CHAIRPERSON FAIR: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER SWAIM: AYE MOTION CARRIED. Manager Smith commented, "Reminding the Board of our original plan which was to get a new Actuary on board, which we have done. Give that Actuary the opportunity to get into the data and catch up on reports. We have one (1) more report to go. So, I would suggest at this point, that we give Larry (Smith) the time to complete the final report and then that would be a great opportunity to have such a Workshop and then move to the final phase of our original Plan which was to study and evaluate the Plan for potential Amendments." Continuing, Manager Smith stated, "I think it is important to have the most current data to analyze and study the Plan, so I think it is beneficial to move forward with that." Manager Smith thanked Mr. Wilson for his Report. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 9, 2010 PAGE 4 OF 9 INFORMATIONAL AGENDA g:f= INFORMATIONAL Q8 100. Office Of The City Manager And Finance And Administrative Services Department Providing A Summary Of Pension - Related Expenditures For The Fourth Quarter For Fiscal Year 2010. Mr. Shawn Boyle, Director, Finance and Administrative Services Department presented this Agenda Item and while he commented about the Plan summary, he noted, "It is up almost twenty -one percent (21%)." Mr. Boyle added, "The Plan has strengthened from last year to this year and that is what this document presented demonstrates." Manager Smith remarked, "Also moving forward into 2010 and more specifically into 2011 — reduction in staffing levels that will endear to our benefit as we look to spread salaries over the entire Plan." Manager Smith then added, "And this is through reorganizations that have taken place over the last year and a half and two (2) Budget cycles, so that will endear to our benefit also from a Funding standpoint." Discussion ensued on Expenditures for the 4 Quarter. Chairperson Fair mentioned to Mr. West that, "A lot of Money Managers, given the current environment, are willing to entertain the notion of lowering their fees." Discussion. Tape 1 /Side B Mr. West commented, "If the Board would like The Bogdahn Group to send a communication to that effect." There were no other objections voiced. Mr. West then stated, "The (Bogdahn) Group really is seeking a cost reduction and what can you offer." Mr. West noted, "We will have that conversation and see if we can bring anything additional back." INFORMATIONAL 101. Finance And Administrative Services Department Providing A Summary Of The Pension Income Statements. Mr. Boyle presented this Agenda Item and noted, "Galliard (Capital Management) is consistently falling behind in invoicing us." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES w REGULAR MEETING - NOVEMBER 9, 2010 PAGE 5 OF 9 Referencing an invoice, Mr. Boyle explained, "Let me point out, Lewis Longman & Walker that was actually the cost for the review of the Intercontinental Agreement." Mr. 01. Boyle suggested, "I would like the Board to consider allowing us to maybe even go out and talk and shop around a little bit." Chairperson Fair asked, "How long have we had the contract with Lewis Longman (& Walker) as our Attorney for the Plan?" Manager Smith commented, "I can only tell you that it is at least since 2005 since I have been here and I do not know the relationship prior to that." Chairperson Fair asked, "Do we have a contract that outlines the terms of the engagement ?" Manager Smith replied, "I think it is essentially an engagement letter approach." Discussion. CONSENT AGENDA CONSENT 200. Office Of The City Clerk Requesting Approval Of The August 10, 2010 Board Of Trustees Regular Meeting Minutes. "I MAKE A MOTION TO APPROVE THE AUGUST 10 (2010) MINUTES AS PRESENTED." MOTION BY BOARD MEMBER SWAIM. SECONDED BY VICE CHAIRMAN McMAHAN. DISCUSSION. VOTE: BOARD MEMBER SWAIM: AYE VICE CHAIRMAN McMAHAN: AYE CHAIRPERSON FAIR: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER WATKINS: AYE MOTION CARRIED. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 300. Not Used. 400. REPORTS No Reports were given. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 9, 2010 PAGE 6 OF 9 PUBLIC INPUT No one spoke. PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 500. Not Used. REGULAR AGENDA - PART II REGULAR 601. Finance And Administrative Services Department Discussion Of The Future Valuation Of The City Of Winter Springs Defined Benefit Plan. Mr. Boyle remarked, "That was just a summarization of the Plan." Chairperson Fair stated, `Basically, let's recap that and we are going to get the Actuarial Report for the Plan Year Ending September 30, 2010 and at that point, we will be able to really discuss the Plan's future." REGULAR 602. Finance And Administrative Services Department Providing An Update Of The Rebalancing And Intercontinental Real Estate Corporation Fund Manager. In discussing the Galliard (Capital Management) Portfolio, Mr. West stated, "The liquidation order went in, and in accordance with the Funding schedule — and the initial call was supposed to take place during the month and what actually happened - the Capital was not actually called until October 12 (2010), so unfortunately, we liquidated the Fund at the beginning of the month expecting - end of the month, but within the month, Capital (Management) called and wired requirement. The notice came from Intercontinental (Real Estate Corporation) on the 12 (October 2010), so we could have stayed invested during that month unbeknownst to us we received a different communication. Honestly, I think there were a couple of situations where they did push back the call to allow some client's time to get the required documentation. Those are pretty rigid windows that they have to comply with as well." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 9, 2010 PAGE 7 OF 9 Chairperson Fair commented, "Those are kind of things you really can not control." Mr. West replied, "We received the schedule with the dates. We need to comply with those dates. We made sure Capital (Management) is available and as it turned out it happened, CU* we got a second notice delaying the call. There is nothing anyone can do about that. I received a confirmation — that on the 12 (October 2010) the Funds were wired and we have received confirmation from Intercontinental (Real Estate Corporation)." Chairperson Fair asked, "Has the full amount now been transferred in full to Intercontinental (Real Estate Corporation) based on the target allocation ?" Mr. West responded, "That is correct. The calculation, the agreed amount was 1.3 million (dollars) [$1,300,000.00] and so the full 1.3 million (dollars) [$1,300,000.00] is with Intercontinental (Real Estate Corporation) successfully." REGULAR 603. Finance And Administrative Services Department Presentation From Bogdahn Consulting, LLC Of The Investment Review Report For The Quarter Ending September 2010. Mr. West introduced this Agenda Item and noted, "The correlation for this period was upwards of seventy -seven percent (77 %)." Mr. West then added, "We are optimistic going forward that we will see some additional value -added brought from the Managers." The Winter Springs General Employees General Plan and Trust for 3 Quarter 2010 was reviewed next. Mr. West distributed a document entitled, "Winter Springs General Asset Allocation" as of May 24, 2010 to the Board Members. Continuing, Mr. West mentioned, "October was a good month by the way. So, we are looking at an asset value of $21,568,360.00. The first month of the new Fiscal Year, we are off to a good start." Discussion ensued on Lateef Asset Management's performance. Mr. West stated, "We would expect that this strategy should start delivering in that environment. Again, as previously discussed, this is very concentrated strategy." Chairperson Fair replied, "That's what concems me is — there is only thirty five (35) stocks — in the Portfolio." Continuing, Chairperson Fair indicated, "It is a very small Portfolio for this amount of money." Mr. West stated, "We are comfortable as long as they are diversified with one (1) other domestic equity manager." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 9, 2010 /r4 PAGE 8 OF 9 With further discussion, Mr. West commented, "I think the issue that Lateef (Asset Management) is experiencing is that they have gravitated more towards a higher quality company." Continuing, Mr. West stated, "They move towards companies that have very g: favorable growth metrics that we would hope or expect for a growth manager. They are being consistent as far as applying the strategy." Chairperson Fair stated, "When you have this much money and only twenty (20) stocks, that is a lot of risk. A great percentage of your return is hinging just on twenty (20) company's success. I am a little concerned about that." Mr. West remarked, "If there is concern, we would be perfectly happy to conduct a search or take a look at what some of the other growth managers have been doing and bring a comparison in to Lateef (Asset Management). We don't have any problem doing that." Tape 2 /Side A Mr. West discussed different alternatives with the Board Members. Chairperson Fair responded, "I tend to agree with Ben's (McMahan) suggestion of having them at a meeting. But also at the same time, taking a look at the other Managers that you would have available that you would have on your short list and us just reviewing that just within our Board and taking a look at them, and lets compare them to Lateef (Asset Management). You would have the numbers. Correct ?" Mr. West replied, "Yes." Continuing, Chairperson Fair stated, "You could take this similar type of information, compare your other short list of Managers that fit that discipline, compare that to Lateef (Asset Management) and see if maybe see what we are missing here. What should we expect? And if the evidence is overwhelmingly that maybe they are not performing as well as some as the other Managers that would give us a good indication that we might want to consider making a change." Discussion. Furthermore, Mr. West stated, "I think we can come up with a way to qualify that in one piece of analysis." Chairperson Fair replied, "And maybe even throw the S & P (Standard & Poor's) 500 in there in that analysis between the different Managers you have in that discipline, so that we can kind of take an overview — that we do need to do something." Mr. West remarked, "We would be more than happy to take that directive and have that report." Board Member Vernon Rozelle, Jr. said to Mr. West, "Could you give us for the next Meeting an analysis of what would happen if we did move quickly in the S & P (Standard & Poor's) 500, before too much more time goes on with part of the Fund." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 9, 2010 PAGE 9 OF 9 Chairperson Fair asked, "Is everybody okay with asking Dave (West) to bring that information back next time ?" There were no objections voiced. Continuing, Chairperson Fair commented, "Just so we have something to look at. Our ip"e duty and obligation — fiduciary responsibility to make sure that the Managers that we have selected and this was a Manager that was selected prior to this Board, I was not on the Board that selected Lateef (Asset Management) and I think of these five (5) Members, Vernon (Rozelle) is the only Member that originally was on this Board that selected Lateef (Asset Management). It is our responsibility to continue to monitor that." Mr. West commented, "We would be happy to put that report together and it will be a great discussion." ADJOURNMENT Chairperson Fair adjourned the Regular Meeting at 8:22 p.m. RESPECTFULLY SUBMITTED: JOAN L. BROWN DEPUTY CITY CLERK NOTE: These Minutes were approved at the , 2011 Board of Trustees Regular Meeting.